OREANDA-NEWS. December 26, 2014 - Gazprombank (Open Joint-stock Company) issued consolidated IFRS financial statements for the nine months ended 30 September 2014.

Gazprombank Group's (the "Group") total assets per IFRS financial statements for the nine months ended 30 September 2014 increased by 10.9% and amounted to RUB 4 044.8bn. The growth of assets was mainly driven by the growth of gross loan portfolio by 14.3% reaching RUB 2 784.6bn, and the increase of cash and cash equivalents from RUB 521.9bn as of the year-end 2013 to RUB 561.7bn as of 30.09.2014. The share of cash and cash equivalents in the Group's total assets amounted to 13.9%, with 71.6% of cash and cash equivalents represented in foreign currency (RUB 401.9bn).

As of 30.09.2014 the share of the net loan portfolio in the total assets of the Group constituted 65.9%, increasing by 2.3 p.p. vs. 30.06.2014. Gross corporate loans grew by 14.9%, as compared to the end of 2013, and amounted to RUB 2 466.0bn. Gross retail loans posted a growth of 10.8% from RUB 287.6bn as of the year-end 2013 to RUB 318.6bn as of 30.09.2014.

The share of securities portfolio in the Group's total assets amounted to 9.5%. Most of securities (73.3%) are fixed income instruments, predominately Russian corporate and government bonds. During the 9 months of 2014, investments in securities decreased by 8.0% from RUB 419.8bn to RUB 386.2bn.

Stable funding base

Customer funds remain the principal source of the Group's funding base: their share in liabilities was 68.1% as of 30.09.2014. As of 30.09.2014 funds from corporate and retail clients amounted to RUB 2 474.1bn, having increased by 9.4% as compared to the end of 2013. Corporate deposits increased by 10.7% over the 9 months of 2014 and amounted to RUB 2 067.9bn. Retail deposits grew by 3.3% during the 9 months of 2014 and amounted to RUB 406.2bn as of 30.09.2014.

During the 9 months of 2014, borrowings in debt capital markets, including eurobonds, domestic bonds and syndicated loans, increased by 26.0% and reached RUB 499.5bn as of 30.09.2014. The growth was achieved due to the issuing of USD-, CNY- and EUR-denominated eurobonds and domestic RUB bonds. Borrowings in capital markets represent a moderate share of the Group's liabilities, making 13.7% as of 30.09.2014.

Solid asset quality

The volume of non-performing loans (overdue 90 days or more and defaulted loans) remained low and amounted to 1.2% of gross loans as of 30.09.2014 vs. 1.0% as of the end of 2013. Due to worsening economic environment in Russia the Group increased the loan loss provision as a share of gross loans by 1.0 p.p. vs. the end of 2013 to 4.2%. As of 30.09.2014, allowance for impairment amounted to RUB 117.8bn, having increased from RUB 78.7bn as of the end of 2013, and covered non-performing loans more than 3.5 times.

Robust growth of core banking business revenue

During the 9 months of 2014, the Group recognised profit in amount of RUB 9.2bn as compared to RUB 24.0bn for the same period a year before. Total comprehensive income, which additionally includes revaluation of available-for-sale investments and other operations directly recorded in equity, constituted RUB 11.5bn for the 9 months of 2014 against RUB 31.9bn a year before.

The core banking business revenue, net interest and fee income (before allowance for impairment), increased by 18.8% as compared to the 9 months 2013, having reached RUB 79.4bn against RUB 66.8bn in the previous year. The Group's net interest margin for the 9 months of 2014 constituted 3.2%, at the same level as in 2013.

Charge for impairment of interest earning assets in the 9 months of 2014 increased 4.5 times compared to the same period of 2013 and amounted to RUB 46.0bn. As a result, cost of risk increased to 2.1% for the 9 months of 2014 as compared 0.5% in the same period a year before.

Gain from operations with securities in the 9 months of 2014 amounted to RUB 5.6bn vs. a loss of RUB 0.2bn in the 9 months 2013. At the same time, gain from operations with foreign currency increased 2.7 times in the 9 months of 2014 due to increased volatility of Rouble FX rate and amounted to RUB 14.7bn vs RUB 5.4bn a year before.

The policy of operating expenses optimisation allowed the Group to achieve lower growth rates of banking administrative expenses. Cost-to-income ratio amounted to 37.5% for the 9 months of 2014 as compared to 47.1% for 2013.

Capital adequacy

The Group's total capital calculated in accordance with the requirements of Basel II reached RUB 497.1bn, having increased, as compared to the end of 2013, by 5.5%. This increase is attributable primarily to the Group's issuance of CHF 350mn Tier 2 subordinated Eurobonds. At the same time, tier 1 capital posted a decrease during the 9 months of 2014 by 1.2% and amounted to RUB 347.3bn.

21.2% growth of risk weighted assets during the 9 months of 2014 resulted in a lower capital adequacy ratios calculated in accordance with Basel II. As of 30.09.2014, tier I capital adequacy ratio amounted to 8.0% as compared to 9.9% as of 31.12.2013. Total capital adequacy ratio amounted to 11.5% as compared to 13.2% as of the end of 2013.